Uncrystallised funds pension lump sum (UFPLS)

Uncrystallised funds pension lump sum, known as UFPLS (also called a FLUMP), is another way of taking pension benefits without going into drawdown or buying an annuity.
It can be used to deplete the fund in one go, taking 25% tax free and the remaining 75% taxable (as indeed can flexi-access drawdown).
However, UFPLS is probably more likely to be used to lessen tax, and leave the remaining fund invested in a tax-efficient way. It would only be suitable if you did not want all of your tax-free cash at once. An example of how it could work may explain more:
Mr Farage, is retired, and has a pension fund of £100,000. He likes travelling and meeting people, and wants £8,500 to pay for a tour of Eastern European countries.  He already has pension income of £20,000 per year.
He is very happy with how his £100,000 is invested and wants to leave as much as possible invested. Therefore, he takes only a portion of the tax free cash and a portion of the taxable element. He takes £10,000 out of his pension.
This amounts to £2,500 of tax-free cash and £7,500 as a taxable payment. He pays tax of £1,500 on the £7,500 so ends up with £6,000 plus the tax-free cash. This amounts to a total £8,500. 
The following year he decides to he wants to buy a "round the world" plane ticket to experience more cultures. He expects to travel in style, and expects to spend £17,000. He has £90,000 left in his pension. This time he takes £20,000 as a UFPLS payment. This provides him with £5,000 tax-free cash, and £15,000 as a taxable payment. After £3,000 tax, this leaves him with £12,000, plus the £5,000, amounting to £17,000 in total.
Continuing this example, this then leaves £70,000 invested in the pension. The key advantage of this type of contract is that the tax-free cash stays invested and stays in a tax efficient environment also. The tax free cash is 25% of the fund value, and if the fund goes up in value then the amount of tax-free cash increases. However, this is also a disadvantage, because if the value of the pension goes down, so does the tax-free cash.
In a nutshell, it is just like taking different pensions at different times. If you had three separate personal pension funds, one worth £10,000, one £20,000 and a third £70,000, then exactly the same could be achieved.  You take the £10,000 in year one, (£2,500 plus £7,500, minus tax), and  then £20,000 in year two (£5,000 tax free, plus £15,000  minus tax). Leaving the third pension of £70,000 invested.


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